Exhibit 1.1
CLAYMORE SECURITIES DEFINED PORTFOLIOS,
SERIES 206
LARGE-CAP CORE PORTFOLIO, SERIES 4
SMALL-CAP CORE PORTFOLIO, SERIES 3
STRATEGIC EQUITY ALLOCATION TRUST, SERIES 2
DOW 10(SM) PORTFOLIO (15-MONTH), 1ST QUARTER 2005
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement dated as of January 4, 2005, between
Claymore Securities, Inc., as Depositor, and The Bank of New York, as Trustee,
sets forth certain provisions in full and incorporates other provisions by
reference to the document entitled "Standard Terms and Conditions of Trust For
Series Formed on or Subsequent to December 18, 2001" (herein called the
"Standard Terms and Conditions of Trust"), and such provisions as are set forth
in full and such provisions as are incorporated by reference constitute a single
instrument. All references herein to Articles and Sections are to Articles and
Sections of the Standard Terms and Conditions of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor and the Trustee agree as follows:
PART I.
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the provisions contained
in the Standard Terms and Conditions of Trust are herein incorporated by
reference in their entirety and shall be deemed to be a part of this instrument
as fully and to the same extent as though said provisions had been set forth in
this instrument.
PART II.
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
(1) The equity securities listed in the Schedule hereto have been
deposited in the Trust(s) under this Reference Trust Agreement as indicated
on the attached Schedule A.
(2) For the purposes of the definition of the term "Unit" in
Article I, it is hereby specified that the fractional undivided interest in
and ownership of a Trust is the amount described in Amendment No. 1 to the
Trust's Registration Statement (Registration No. 333-121292) as filed with
the Securities and Exchange Commission today. The fractional undivided
interest may (a) increase by the number of any additional Units issued
pursuant to Section 2.03, (b) increase or decrease in connection with an
adjustment to the number of Units pursuant to Section 2.03, or (c) decrease
by the number of Units redeemed pursuant to Section 5.02.
(3) The term "Deferred Sales Charge" shall mean the "deferred
sales fee" as described in the Prospectus.
(4) The terms "Income Account Record Date" and "Capital Account
Record Date" shall mean the dates set forth under "Essential
Information--Record Dates" in the Prospectus.
(5) The terms "Income Account Distribution Date" and "Capital
Account Distribution Date" shall mean the dates set forth under "Essential
Information--Distribution Dates" in the Prospectus.
(6) The term "Initial Date of Deposit" shall mean the date of this
Reference Trust Agreement as set forth above.
(7) The definition of "Supplemental Indenture" is hereby deleted
in its entirety.
(8) The definition of "Addendum to the Reference Trust Agreement"
is hereby deleted in its entirety.
(9) The term "Additional Securities" shall mean such Securities
which have been deposited pursuant to Section 2.05 to effect an increase
over the number of Units initially specified in the Reference Trust
Agreement.
(10) The number of Units of the Trust(s) referred to in Section
2.03 shall be equal to the "Number of Units" in the Statement(s) of
Financial Condition in the Prospectus.
(11) The first paragraph of Section 5.01 is hereby amended and
restated to read as follows:
SECTION 5.01. TRUST EVALUATION. As of the Evaluation Time (a) on the
last Business Day of each year, (b) on the day on which any Unit is
tendered for redemption and (c) on any other day desired by the Trustee or
requested by the Depositor, the Trustee
shall: Add (i) all moneys on deposit in a Trust (excluding (1) cash, cash
equivalents or Letters of Credit deposited pursuant to Section 2.01 hereof
for the purchase of Contract Securities, unless such cash or Letters of
Credit have been deposited in the Interest and Principal Accounts because
of failure to apply such moneys to the purchase of Contract Securities
pursuant to the provisions of Sections 2.01, 3.03 and 3.04 hereof and (2)
moneys credited to the Reserve Account pursuant to Section 3.05 hereof),
plus (ii) the aggregate Evaluation of all Securities (including Contract
Securities and Reinvestment Securities) on deposit in such Trust as is
determined by the Evaluator (such evaluations shall take into account and
itemize separately (i) the cash on hand in the Trust or moneys in the
process of being collected from matured interest coupons or bonds matured
or called for redemption prior to maturity, (ii) the value of each issue of
the Securities in the Trust on the bid side of the market as determined by
the Evaluator pursuant to Section 4.01, and (iii) interest accrued thereon
not subject to collection and distribution). For each such Evaluation there
shall be deducted from the sum of the above (i) amounts representing any
applicable taxes or governmental charges payable out of the respective
Trust and for which no deductions shall have previously been made for the
purpose of addition to the Reserve Account, (ii) amounts representing
estimated accrued fees of the Trust and expenses of such Trust including
but not limited to unpaid fees and expenses of the Trustee, the Evaluator,
the Supervisor, the Depositor and bond counsel, in each case as reported by
the Trustee to the Evaluator on or prior to the date of evaluation, (iii)
any moneys identified by the Trustee, as of the date of the Evaluation, as
held for distribution to Unitholders of record as of a Record Date or for
payment of the Redemption Value of Units tendered prior to such date and
(iv) unpaid organization costs in the estimated amount per Unit set forth
in the Prospectus. The resulting figure is herein called a "TRUST FUND
EVALUATION." The value of the pro rata share of each Unit of the respective
Trust determined on the basis of any such evaluation shall be referred to
herein as the "UNIT VALUE."
(12) For the purposes of Section 6.01(g)(i), the liquidation amount
shall be 20% of the total value of all Securities deposited in the Trust(s)
during a Trust's initial offering period at the time of each such deposit.
(13) Article III is hereby amended by adding the following section:
SECTION 3.23. BOOKKEEPING AND ADMINISTRATIVE EXPENSES. If so provided
in the Prospectus, as compensation for providing bookkeeping and other
administrative services of a character described in Section 26(a)(2)(C) of
the Investment Company Act of 1940 to the extent such services are in
addition to, and do not duplicate, the services to be provided hereunder by
the Trustee or the Depositor for providing supervisory services, the
Depositor shall receive at the times specified in Section 3.05, against a
statement or statements therefor submitted to the Trustee an aggregate
annual fee in an amount which shall not exceed that amount set forth in the
Prospectus, calculated as specified in Section 3.05, but in no event shall
such compensation, when combined with all compensation received from other
series of the Trust or other unit investment trusts sponsored by the
Depositor or its affiliates for providing such bookkeeping and
administrative services in any calendar year exceed the aggregate cost to
the Depositor for providing such services
to such unit investment trusts. Such compensation may, from time to time,
be adjusted provided that the total adjustment upward does not, at the time
of such adjustment, exceed the percentage of the total increase, during the
period from the Trust Agreement to the date of any such increase, in
consumer prices for services as measured by the United States Department of
Labor Consumer Price Index entitled "All Services Less Rent of Shelter" or
similar index as described under Section 3.18. The consent or concurrence
of any Unitholder hereunder shall not be required for any such adjustment
or increase. Such compensations shall be paid by the Trustee, upon receipt
of invoice therefor from the Depositor, upon which, as to the cost incurred
by the Depositor of providing services hereunder the Trustee may rely, and
shall be charged against the Income and Capital Accounts as specified in
Section 3.05. The Trustee shall have no liability to any Unitholder or
other person for any payment made in good faith pursuant to this Section.
If the cash balance in the Income and Capital Accounts shall be
insufficient to provide for amounts payable pursuant to this Section 3.23,
the Trustee shall have the power to sell (1) Securities from the current
list of Securities designated to be sold pursuant to Section 5.02 hereof,
or (2) if no such Securities have been so designated, such Securities as
the Trustee may see fit to sell in its own discretion, and to apply the
proceeds of any such sale in payment of the amounts payable pursuant to
this Section 3.23.
Any moneys payable to the Depositor pursuant to this Section 3.23
shall be secured by a prior lien on the Trust except that no such lien
shall be prior to any lien in favor of the Trustee under the provisions of
Section 6.04.
(14) The phrases "supervisory services," "supervisory portfolio
services" and "portfolio supervisory services" in Sections 3.18 are hereby
replaced with the phrase "portfolio supervisory services and bookkeeping
and administrative expenses."
(15) Section 7.05 is hereby amended and replaced in its entirety
with the following:
SECTION 7.05. COMPENSATION. The Depositor shall receive at the times
set forth in Sections 3.05, 3.18, 3.23 and 4.03 as compensation for
performing portfolio supervisory services, bookkeeping and administrative
expenses and evaluation services, such amount and for such periods as
specified the Prospectus and/or Reference Trust Agreement. The compensation
for providing portfolio supervisory services, bookkeeping and
administrative expenses and evaluation services shall be made on the basis
of the largest number of units outstanding at any time during the period
for which such compensation is being computed. At no time, however, will
the total amount received by the Depositor for services rendered to all
series of Claymore Securities Defined Portfolios in any calendar year
exceed the aggregate cost to them of supplying such services in such year.
Such rate may be increased by the Trustee from time to time, without the
consent or approval of any Unitholder, or the Depositor, by amounts not
exceeding the proportionate increase during the period from the date of
such Prospectus and/or Reference Trust Agreement to the date of any such
increase, in consumer prices as published either under
the classification "All Services Less Rent" in the Consumer Price Index
published by the United States Department of Labor or, if such Index is no
longer published, a similar index.
In the event that any amount of the compensation paid to the Depositor
pursuant to Sections 3.05, 3.18 and 3.23 and 4.03 is found to be an
improper charge against a Trust, the Depositor shall reimburse the Trust in
such amount. An improper charge shall be established if a final judgment or
order for reimbursement of the Trust shall be rendered against the
Depositor and such judgment or order shall not be effectively stayed or a
final settlement is established in which the Depositor agrees to reimburse
the Trust for amounts paid to the Depositor pursuant to this Section 7.05.
(16) The first two sentences of Section 3.22 are hereby amended and
replaced with the following:
SECTION 3.22. CREATION AND DEVELOPMENT FEE. If the Prospectus related
to a Trust specifies a creation and development fee, the Trustee shall, on
or immediately after the end of the initial offering period, withdraw from
the Capital Account, an amount equal to the unpaid creation and development
fee as of such date and credit such amount to a special non-Trust account
designated by the Depositor out of which the creation and development fee
will be distributed to the Depositor (the "Creation and Development
Account"). The creation and development fee is the per unit amount
specified in the Prospectus for the Trust.
(17) Article III is hereby amended by adding the following section:
SECTION 3.24. LICENSE FEES. If so provided in the Prospectus, the
Depositor may enter into a Licensing Agreement (the "AGREEMENT") with a
licensor (the "LICENSOR") described in the Prospectus in which the
Trust(s), as consideration for the licenses granted by the Licensor for the
right to use its trademarks and trade names, intellectual property rights
or for the use of databases and research owned by the Licensor, will pay a
fee set forth in the Agreement to the applicable Licensor or the Depositor
to reimburse the Depositor for payment of the expenses.
If the Agreement provides for an annual license fee computed in whole
or part by reference to the average daily net asset value of the Trust
assets, for purpose of calculating the accrual of estimated expenses such
annual fee shall accrue at a daily rate and the Trustee is authorized to
compute an estimated license fee payment (i) until the Depositor has
informed the Trustee that there will be no further deposits of additional
Securities, by reference to an estimate of the average daily net asset
value of the Trust assets which the Depositor shall provide the Trustee,
(ii) thereafter and during the calendar quarter in which the last business
day of the period described in clause (i) occurs, by reference to the net
asset value of the Trust assets as of such last business day, and (iii)
during each subsequent calendar quarter, by reference to the net asset
value of the Trust assets as of the last business day of the preceding
calendar quarter. The Trustee shall adjust the net asset value (Trust Fund
Evaluation) as of the dates specified in the
preceding sentence to account for any variation between accrual of
estimated license fee and the license fee payable pursuant to the
Agreement, but such adjustment shall not affect calculations made prior
thereto and no adjustment shall be made in respect thereof.
(18) Section 2.05 (b) is replaced in its entirety with the
following:
(b) Additional Securities deposited during the 90 days following
the initial deposit made pursuant to Section 2.01 hereof shall maintain as
closely as practicable the Original Proportionate Relationship, except as
provided in this Section 2.05(b). Additional Securities may be deposited or
purchased in round lots; if the amount of the deposit is insufficient to
acquire round lots of each Security to be acquired, the Additional
Securities shall be deposited or purchased in the order of the Security in
the Trust most under represented immediately before the deposit with
respect to the Original Proportionate Relationship. Instructions to
purchase Additional Securities under this Section shall be in writing and
shall direct the Trustee to purchase, or enter into contracts to purchase,
Additional Securities; such instructions shall also specify the name, CUSIP
number, if any, aggregate amount of each such Additional Security and price
or range of price. If, at the time of a subsequent deposit under this
Section, Securities of an Original Issue are unavailable, cannot be
purchased at reasonable prices or their purchase is prohibited or
restricted by applicable law, regulation or policies, in lieu of the
portion of the deposit that would otherwise be represented by those
Securities, the Depositor may (A) deposit (or instruct the Trustee to
purchase) Securities of another Original Issue or (B) deposit cash or a
letter of credit with instructions to acquire the Securities of such
Original Issue when they become available.
(19) Section 4.01(b) is replaced in its entirety by the following:
(b) During the initial offering period such Evaluation shall be
made in the following manner: if the Securities are listed on a national
securities exchange or foreign securities exchange, such Evaluation shall
generally be based on the last available sale price on or immediately prior
to the Evaluation Time on the exchange which is the principal market
therefor, which shall be deemed to be the New York Stock Exchange if the
Securities are listed thereon (unless the Evaluator deems such price
inappropriate as a basis for evaluation) or, if there is no such available
sale price on such exchange, at the last available offer prices of the
Securities. Securities not listed on the New York Stock Exchange but
principally traded on the Nasdaq National Market System will be valued at
Nasdaq's official close price. If the Securities are not so listed or, if
so listed, the principal market therefor is other than on such exchange or
there is no such available sale price on such exchange, such Evaluation
shall generally be based on the following methods or any combination
thereof whichever the Evaluator deems appropriate: (i) on the basis of the
current offer price for comparable securities (unless the Evaluator deems
such price inappropriate as a basis for evaluation), (ii) by determining
the valuation of the Securities on the offer side of the market by
appraisal or (iii) by any combination of the above. If the Trust holds
Securities denominated in a currency other than U.S. dollars, the
Evaluation of such Security shall be converted to U.S. dollars based on
current offering side exchange rates (unless the Evaluator deems such
prices inappropriate as a basis for
valuation). The Evaluator shall add to the Evaluation of each Security
which is traded principally on a foreign securities exchange the amount of
any commissions and relevant taxes associated with the acquisition of the
Security. As used herein, the closing sale price is deemed to mean the most
recent closing sale price on the relevant securities exchange immediately
prior to the Evaluation Time. For each Evaluation, the Evaluator shall also
confirm and furnish to the Trustee and the Depositor, on the basis of the
information furnished to the Evaluator by the Trustee as to the value of
all Trust assets other than Securities, the calculation of the Trust Fund
Evaluation to be computed pursuant to Section 5.01.
(20) Section 4.01(c) is replaced in its entirety by the following:
(c) For purposes of the Trust Fund Evaluations required by Section
5.01 in determining Redemption Value and Unit Value and for secondary
market purchases, Evaluation of the Securities shall be made in the manner
described in 4.01(b), on the basis of the last available bid prices of the
Securities (rather than offer prices), except in those cases in which the
Securities are listed on a national securities exchange or a foreign
securities exchange and the last available sale prices are utilized. In
addition, with respect to each Security which is traded principally on a
foreign securities exchange, the Evaluator shall (i) not make the addition
specified in the fourth sentence of Section 4.01(b) and (ii) shall reduce
the Evaluation of each Security by the amount of any liquidation costs
(other than brokerage costs incurred on any national securities exchange)
and any capital gains or other taxes which would be incurred by the Trust
upon the sale of such Security, such taxes being computed as if the
Security were sold on the date of the Evaluation.
(21) Section 9.05 is hereby revised to read as follows:
SECTION 9.05. WRITTEN NOTICE. Any notice, demand, direction or
instruction to be given to the Depositor, Evaluator or Supervisor hereunder
shall be in writing and shall be duly given if mailed or delivered to the
Depositor, 0000 Xxxxxxxxx Xxxx Xxxxx, Xxxxx, Xxxxxxxx 00000, or at such
other address as shall be specified by the Depositor to the other parties
hereto in writing.
(22) The second paragraph of Section 6.02 is replaced in its
entirety as follows:
An audit of the accounts of each Trust shall not be conducted unless
the Depositor determines that such an audit is required. In the event that
the Depositor determines that an audit is required, the accounts of each
Trust shall be audited not less than annually by independent public
accountants designated from time to time by the Depositor and reports of
such accountants shall be furnished by the Trustee, upon request, to
Unitholders. The Trustee, however, in connection with any such audits shall
not be obligated to use Trust assets to pay for such audits in excess of
the amounts, if any, indicated in the Prospectus relating to such Trust.
The Trustee shall maintain and provide, upon the request of a Unitholder or
the Depositor, the Unitholders' or the Unitholder's
designated representative with the cost basis of the Securities represented
by the Unitholder's Units.
(23) The first paragraph of Section 6.04 is replaced in its
entirety as follows:
SECTION 6.04. COMPENSATION. Subject to the provisions of Section 3.14
hereof, the Trustee shall receive at the times set forth in Section 3.05,
as compensation for performing ordinary normal recurring services under
this Indenture, an amount calculated at the annual compensation rate stated
in the Prospectus. The Trustee shall charge a pro rated portion of its
annual fee at the times specified in Section 3.05, which pro rated portion
shall be calculated on the basis of the largest number of Units in such
Trust at any time during the primary offering period. After the primary
offering period has terminated, the fee shall accrue daily and be based on
the number of Units outstanding on the first business day of each calendar
year in which the fee is calculated or the number of Units outstanding at
the end of the primary offering period, as appropriate. The Trustee may
from time to time adjust its compensation as set forth above, PROVIDED that
total adjustment upward does not, at the time of such adjustment, exceed
the percentage of the total increase, after the date hereof, in consumer
prices for services as measured by the United States Department of Labor
Consumer Price Index entitled "All Services Less Rent," or, if such index
shall cease to be published, then as measured by the available index most
nearly comparable to such index. The consent or concurrence of any
Unitholder hereunder shall not be required for any such adjustment or
increase, however, the consent of the Depositor shall be required. Such
compensation shall be charged by the Trustee against the Income and Capital
Accounts of each Trust; PROVIDED, HOWEVER, that such compensation shall be
deemed to provide only for the usual, normal and proper functions
undertaken as Trustee pursuant to this Indenture.
(24) Section 2.03 is hereby amended and replaced in its entirety
with the following:
SECTION 2.03. ISSUANCE OF UNITS. By executing the Reference Trust Agreement
and receipt for deposited Securities, the Trustee will thereby acknowledge
receipt of the deposit of the Securities listed in the Schedules to the
Reference Trust Agreement and referred to in Section 2.01 hereof, and
simultaneously with the receipt of said deposit, has recorded on its books the
ownership, by the Depositor or such other person or persons as may be indicated
by the Depositor, of the aggregate number of Units specified in the Reference
Trust Agreement and has delivered, or on the order of the Depositor will
deliver, in exchange for such Securities, cash or a Letter of Credit,
documentation evidencing the ownership of the number of Units specified or, if
requested by the Depositor, the ownership by DTC of all such Units and will
cause such Units to be credited at DTC to the account of the Depositor or,
pursuant to the Depositor's direction and as hereafter provided, the account of
the issuer of the Letter of Credit referred to in Section 2.01. The number of
Units in a Trust may be increased through a split of the Units or decreased
through a reverse split thereof, as directed by the Depositor, on any day on
which the Depositor is the only Unitholder of such Trust, which revised number
of Units shall be recorded by the Trustee on its books. Effective as of the
Evaluation Time on January 4, 2005, in the event that the aggregate value of
Securities in the Trust has increased since the evaluation on January 3, 2005,
the Trustee shall issue such number of additional Units to the Unitholder of
outstanding Units as of the close of business on January 3, 2005, that the
price per Unit computed as of the Evaluation Time on January 4, 2005, plus
the maximum applicable sales charge shall equal approximately $10 per Unit
(based on the number of Units outstanding as of said Evaluation Time,
including the additional Units issued pursuant to this sentence); in the
event that the aggregate value of Securities in the Trust Fund has decreased
since the evaluation on January 3, 2005, there will be a reverse split of the
outstanding Units, and said Unitholder will surrender to the Trustee for
cancellation such number of Units, that the price per Unit computed as of the
Evaluation Time on January 4, 2005, plus the maximum applicable sales charge
shall equal approximately $10 per Unit (based on the number of Units
outstanding as of said Evaluation Time, reflecting cancellation of Units
pursuant to this sentence). The Trustee hereby agrees that on the date of any
deposit of additional Securities pursuant to Section 2.05 it shall
acknowledge that the additional Securities identified therein have been
deposited with it by recording on its books the ownership, by the Depositor
or such other person or persons as may be indicated by the Depositor, of the
aggregate number of Units to be issued in respect of such additional
Securities so deposited.
(25) Section 2.01 is hereby amended and replaced in its entirety
with the following:
SECTION 2.01. DEPOSIT OF SECURITIES. The Depositor, on the date of the
Reference Trust Agreement, has deposited with the Trustee in trust the
Securities and contracts (or cash or a Letter of Credit in the amount necessary
to settle any contracts for the purchase of Securities entered into by the
Trustee pursuant to the instructions of the Depositor) for the purchase of
Contract Securities listed in the Schedules to the Reference Trust Agreement in
bearer form or duly endorsed in blank or accompanied by all necessary
instruments of assignment and transfer in proper form or Contract Securities
relating to such Securities to be held, managed and applied by the Trustee as
herein provided. The Depositor shall deliver the Securities listed on said
Schedules which were not actually delivered concurrently with the execution and
delivery of the Reference Trust Agreement and which were represented by Contract
Securities to the Trustee within 10 calendar days after said execution and
delivery (the "DELIVERY PERIOD"). In the event that the purchase of Contract
Securities pursuant to any contract shall not be consummated in accordance with
said contract or if the Securities represented by Contract Securities are not
delivered to a Trust in accordance with this Section 2.01 and the moneys, or, if
applicable, the moneys drawn on the Letter of Credit, deposited by the Depositor
are not utilized for Section 3.17 purchases of Replacement Securities, such
funds, to the extent of the purchase price of Failed Contract Securities for
which no Replacement Security were acquired pursuant to Section 3.17, plus all
amounts described in the next succeeding sentence, shall be credited to the
Capital Account and distributed pursuant to Section 3.05 to Unitholders of
record as of the Income Account Record Date next following the failure of
consummation of such purchase. The Depositor shall cause to be refunded to each
Unitholder his pro rata portion of the sales charge levied on the sale of Units
to such Unitholder attributable to such Failed Contract Security. Any amounts
remaining from moneys drawn on the Letter of Credit which are not used to
purchase Replacement Securities or are not used to provide refunds to
Unitholders shall be paid to the Depositor. The Trustee is hereby irrevocably
authorized to effect registration or transfer of the Securities in fully
registered form to the name of the Trustee or to the name of its nominee or to
hold the Securities in a clearing agency registered with the Securities and
Exchange Commission or in a book entry system operated by the Federal Reserve
Board.
(26) Section 2.05(a) is hereby amended and replaced in its entirety
with the following:
SECTION 2.05. DEPOSIT OF ADDITIONAL SECURITIES. (a) Subject to the
requirements set forth below in this Section, the Depositor may, on any Business
Day (the "TRADE DATE"), subscribe for Additional Units as follows:
(1) Prior to the Evaluation Time defined in Section 5.01 on the
Trade Date, the Depositor shall provide notice (the "SUBSCRIPTION NOTICE")
to the Trustee of the Depositor's intention to subscribe for Additional
Units. The Subscription Notice shall identify the Additional Securities to
be acquired (unless such Additional Securities are a precise replication of
the then existing portfolio) and shall either (i) specify the quantity of
Additional Securities to be deposited by the Depositor on the settlement
date for such subscription or (ii) instruct the Trustee to purchase
Additional Securities with an aggregate cost as specified in the
Subscription Notice.
(2) Promptly following the Evaluation Time on such Business Day,
the Depositor shall verify with the Trustee, the number of Additional Units
to be created.
(3) Not later than the time on the settlement date for such
subscription when the Trustee is to deliver the Additional Units created
thereby (which time shall not be later than the time by which the Trustee
is required to settle any contracts for the purchase of Additional
Securities entered into by the Trustee pursuant to the instruction of the
Depositor referred to in subparagraph (1) above), the Depositor shall
deposit with the Trustee (i) any Additional Securities specified in the
Subscription Notice (or contracts to purchase such Additional Securities
together with cash or a letter of credit in the amount necessary to settle
such contracts) or (ii) cash or a letter of credit in the amount equal to
the aggregate cost of the Additional Securities to be purchased by the
Trustee, as specified in the Subscription Notice, together with, in each
case, Cash defined below. "Cash" means, as to the Capital Account, cash or
other property (other than Securities) on hand in the Capital Account or
receivable and to be credited to the Capital Account as of the Evaluation
Time on the Business Day preceding the Trade Date (other than amounts to be
distributed solely to persons other than persons receiving the distribution
from the Capital Account as holders of Additional Units created by the
deposit), and, as to the Income Account, cash or other property (other than
Securities) received by the Trust as of the Evaluation Time on the Business
Day preceding the Trade Date or receivable by the Trust in respect of
dividends or other distributions declared but not received as of the
Evaluation Time on the Business Day preceding the Trade Date, reduced by
the amount of any cash or other property received or receivable on any
Security allocable (in accordance with the Trustee's calculation of the
monthly distribution from the Income Account pursuant to Section 3.05) to a
distribution made or to be made in respect of a Record Date occurring prior
to the Trade Date. Each deposit made pursuant to this Section 2.05 during
the 90 days following the initial date of deposit shall replicate, to the
extent practicable, as specified in subparagraph (b), the Original
Proportionate Relationship, as defined hereinabove. Each deposit made
pursuant to this Section 2.05 after the 90 days following the initial date
of deposit made pursuant to Section 2.01 hereof (except for deposits made
to replace Failed Contract Securities if such deposits occur within 20 days
from the date of a failure occurring within such initial 90 day period)
shall maintain exactly the proportionate relationship existing among the
Securities as of the expiration of such 90 day period.
(4) On the settlement date for a subscription, the Trustee shall,
in exchange for the Securities and cash or Letter of Credit described
above, issue and deliver to or on the order of the Depositor the number of
Units verified by the Depositor with the Trustee. No Unit to be issued
pursuant to this paragraph shall be issued or delivered unless and until
Securities, cash or a Letter of Credit is received in exchange therefor and
no person shall have any claim to any Unit not so issued and delivered or
any interest in the Trust in respect thereof.
(5) Any Additional Securities shall be held, administered and
applied by the Trustee in the same manner as herein provided for the
Securities.
(6) The acceptance of Additional Units by the Depositor in
accordance with the provisions of paragraph (a) of this Section shall be
deemed a certification by the Depositor that the deposit or purchase of
Additional Securities associated therewith complies with the conditions of
this Section 2.05.
(7) Notwithstanding the preceding, in the event that the
Depositor's Subscription Notice shall instruct the Trustee to purchase
Additional Securities in an amount which, when added to the purchase amount
of all other unsettled contracts entered into by the Trustee, exceeds 25%
of the value of the Securities then held (taking into account the value of
contracts to purchase Securities only to the extent that there has been
deposited with the Trustee cash or an irrevocable letter of credit in an
amount sufficient to settle their purchase), the Depositors shall deposit
with the Trustee concurrently with the Subscription Notice cash or a letter
of credit in an amount such that, when added to 25% of the value of the
Securities then held (determined as above) the aggregate value shall be not
less than the purchase amount of the securities to be purchased pursuant to
such Subscription Notice.
This Reference Trust Agreement shall be deemed effective when executed and
delivered by the Sponsor and the Trustee.
IN WITNESS WHEREOF, the parties hereto have caused this Reference Trust
Agreement to be duly executed.
CLAYMORE SECURITIES, INC., DEPOSITOR
By /s/ Xxxxxxxx Xxxxxxx
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Senior Managing Director and
General Counsel
THE BANK OF NEW YORK, TRUSTEE
By /s/ Xxxxxx Xxxxxxxx
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Vice President
SCHEDULE A
SECURITIES INITIALLY DEPOSITED
CLAYMORE SECURITIES DEFINED PORTFOLIOS, SERIES 206
(Note: Incorporated herein and made a part hereof are the "Trust
Portfolio(s)" as set forth in the Prospectus.)
